The opinion of the court was delivered by: LEVET
This is an application for a preliminary injunction against defendant's sale of plaintiff's trademarked products at prices less than those stipulated in plaintiff's fair trade contracts in effect with certain retailers in the State of New York. The injunction is sought pursuant to New York General Business Law, § 369-b, which provides:
' § 369-b. Unfair competition defined and made actionable
'Wilfully and knowingly advertising, offering for sale or selling any commodity at less than the price stipulated in any contract entered into pursuant to the provision of section three hundred sixty-nine-a, whether the person so advertising, offering for sale or selling is or is not a party to such contract, is unfair competition and is actionable at the suit of any person damaged thereby.'
The plaintiff, a Michigan corporation, is a manufacturer of pharmaceuticals, ethical drugs and other drug products. These products bear one or more of plaintiff's trademarks, which have been duly registered in the United States Patent Office. These products include, among others, certain vitamin preparations, 'ABDEC,' 'MYADEC' and 'PALADAC.'
The defendant, a New York corporation, is a retail drug store located at 3 East 14 Street, New York City. Defendant, in the course of its business, sells and offers for sale drug and drug sundries, including products manufactured by plaintiff and bearing the name of Parke, Davis & Company and its trademarks.
In support of its application, plaintiff alleges in substance:
1. That for many years it has been engaged in an extensive advertising program, promoting its products to physicians, pharmacists and indirectly to ultimate consumers, as a result of which plaintiff has developed a vast good will.
2. That in the course of plaintiff's development and maintenance of its good will and system of distribution, it has established, wherever permitted by law, a fair trade structure under which uniform prices have been established for its products.
3. That such a fair trade structure was first established in the State of New York subsequent to the enactment of the New York Fair Trade Act in 1937.
4. That in order to assure itself that retailers are complying with its established resale prices, plaintiff investigates every infraction reported to or discovered by it and explains its fair trade program to retailers accused of violations thereof.
5. That plaintiff has an established policy of sending warning letters to retailers who persist in violations and of bringing suit where the retailers, after such warning, still refuse to stop their illegal conduct.
6. That in furtherance of its policy of enforcing its established minimum prices, plaintiff shops retailers, and since May 160 more than 240 retailers in the New York metropolitan area have been investigated for price violation. Since the middle of 1960, plaintiff has instituted more than 60 enforcement actions in the Borough of Manhattan alone, and 25 injunctions have already been entered.
7. That a warning against price violations was sent to the defendant on March 3, 1961, to no avail, and on August 2, 1961 action was commenced against the defendant seeking to enjoin its price cutting on plaintiff's products; however, defendant's price cutting is continuing.
8. That defendant's customers are primarily workers from other business establishments located in the area who live in other parts of the metropolitan area of New York and thus, in effect, defendant is competing with local retailers ...